Write your investment policy statement

and invest like a professional

In the financial planning world, it’s best practice to have an investment policy statement. For professionals who manage other people’s money, this outlines how they approach investing, the types of assets they invest in, and what triggers changes. It’s carefully thought through, followed, and then revised regularly.

​I don’t manage investments or advise people on how to best invest their money, but I do help the people I work with create their own investment policy statements. This exercise is about thinking through their investment goals, how they will manage their money, and when they plan to make adjustments. Having a written document outlining this helps people stay on track and remember the purpose behind their actions.

​Sound complicated? It doesn’t have to be. It can be as simple as,

​“We are investing in training and education right now. We are confident that this will pay off in the long run, leading to higher-paying jobs and an overall higher standard of living. Our focus in this season of investing is to maximize these opportunities while keeping our costs low (<$ 1,500/month flex spending). We will revisit this after graduation.”

​This is my family’s investment policy statement. It’s always a good reminder to me not to compare our situation to others. To focus on our plan, what we can control, and what we’ve decided is best for our family. What does this look like in practice?

​It’s meant spending some money on additional opportunities that are only available while my husband is still in his training. It’s meant him spending more time focused on his education while I hold up a lot of the other things. It’s meant saying yes to him leaving me to solo-parent for a month so he can attend a prestigious program. This is an investment of both money, time, and energy.

​I say this because you can write an investment policy statement, and it doesn’t have to say when you are going to sell a certain stock. It doesn’t have to include tax loss harvesting or dividends or any other ‘investing’ thing you’ve heard on the internet, unless those are relevant to your goals.

​Honestly, the simpler the better.

Want to write your own investment policy statement? Here’s a simple formula to guide you:

• Define your goals and their timeline. Be specific.
• Write out your why. Why are these your goals? What is your motivation?
• Identify where your current focus lies. What are the things you can control? What are you going to center when you make a decision?
• Specify the financial details. Include dollar amounts, asset allocations, or financial systems you plan to use.
• Determine when you will revisit and reassess your policy. Set at a date or a specific occurrence.

Or try this interactive tool:

Create your investment policy statement GPT

​I’d love to hear what you come up with:

Here’s one more example for the road:

“Our goal is to save for a wedding next year and continue saving for retirement. We are excited about getting married and want to be prepared for the expenses. Retirement planning is also important to us, and we have the funds to set aside a little each paycheck right now. We are going to automate $450 bi-weekly from our checking account to our high-yield savings for wedding expenses. We will automatically contribute up to our company match in our retirement plans and use their model portfolio, given our age, timeline, and risk tolerance for retirement. This means that we need to keep our flex spending to <$900/week. We will revisit this again after the wedding.”